Investment Rationale: NMDC Steel Ltd

CMP: Rs.34.42

Target: Rs.72.

Introduction: NMDC Steel Ltd (NSL), India’s youngest and most advanced integrated steel producer, is rapidly emerging as a key player in the industry. Photo: ETEnergy.

With strong government backing, robust production ramp-up, and global certifications, NSL is well-positioned to capitalize on India's infrastructure growth and increasing steel demand. 

Recent achievements, including the CE certification for European markets, record production milestones at its Nagarnar plant (3 MTPA capacity), and strategic investments in new-age steel products, reinforce its long-term growth trajectory.

Despite near-term losses, rapid operational scaling, government support, and macro tailwinds signal a turnaround story.

Investment Rationale:

🧨Global Market Access & Export Leverage:

☑️CE Certification Unlocks High-Value European Market

NSL is now the first PSU steelmaker in India to receive CE certification for its construction-grade steel, enabling direct exports to Europe.

This boosts NSL’s attractiveness for domestic OEMs manufacturing steel-based products for European buyers, widening its revenue streams.

🧨BIS Certification Expands Domestic & Pipeline Market:

NSL is the first Indian company to receive BIS certification under IS 18384:2023, allowing it to manufacture hot-rolled steel strip, sheet, and plates for pipeline transportation systems—a key growth area.

🧨Operational Ramp-Up & Production Growth:

☑️Rapid Hot Metal Production Growth

The Nagarnar plant has produced 2 million tonnes of hot metal at a record pace. The second million was achieved in just 204 days, improving efficiency.

The plant’s Blast Furnace (Ma Danteshwari) hit a record daily output of 7,268 tonnes, and it has a designed capacity of 9,500 tonnes per day—showing further growth potential.

☑️Scaling HR Coil Production

NSL produced 1 million tonnes of hot-rolled coil (HRC) in a year, hitting this milestone four days ahead of schedule—a testament to its operational efficiency.

☑️Revenue Surge & Improving Margins

Net Sales: ₹2,120 crore in Dec 2024, up 129% YoY (from ₹925 crore).

Net Loss Reduction: ₹758 crore (down 33% YoY), showing improving financials.

🧨Government Backing & Strategic Advantage

☑️Strong Shareholder Support & Policy Tailwinds

61% state ownership ensures policy alignment, capital infusion, and strategic decision-making favoring long-term growth.

Institutional investors hold 19%, showing strong interest from long-term financial players.

The public holds 20%—a sizable retail presence that reflects strong market confidence.

☑️Iron Ore Security & Cost Edge

Parent company NMDC Ltd is India's largest iron ore producer, ensuring raw material security for NSL and lower input costs compared to peers reliant on imports.

🧨Industry Tailwinds & Policy Support

☑️Steel Demand Boom & ‘Make in India’ Push

India remains one of the most competitive steel-producing nations, attracting large private and government investments.

Government focus on infrastructure, railways, and EVs is driving sustained steel demand.

☑️Protection from Cheap Imports & Global Market Realignment

Indian steel prices remain competitive, but the government is addressing concerns over cheaper imports.

Potential anti-dumping measures could favor domestic producers like NSL.

The US-China tariff war may redirect global steel supply chains, benefiting Indian players.

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Risks to Monitor:

🧨Debt & Profitability Concerns:

While net loss is reducing, negative EBITDA of ₹638 crore in Dec 2024 highlights near-term profitability pressures.

🧨Global Steel Price Volatility & Competition:

NSL’s export strategy depends on global steel price trends, where competition from Chinese steelmakers is a factor.

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Conclusion & Price Targets

NSL’s CE certification, strong production ramp-up, government backing, and improving financials position it as a high-growth steel player. Despite near-term losses, operational momentum and policy support indicate a strong turnaround story.

Technical Analysis:

☑️The RSI and ADX are at 29.88 and 38.53. The stock is at the oversold territory.

☑️ Sustained breakout above ₹42-80 could target ₹100-110 in 12-18 months.

☑️Watch out for debt reduction and EU export traction as key catalysts.